The gist of some of the more important Recommendations contained in these Reports are as under:

I. 87th REPORT ON ‘TAX ADMINISTRATION’ RELATING TO THE MINISTRY OF FINANCE (DEPARTMENT OF REVENUE)

Re-orienting the efforts for widening of tax base by bringing in potential and high net-worth assessees into the tax net stressed

The Committee have noted that though the total direct tax collections have registered an increase in the preceding six years i.e. from Rs. 2,30,181 crore in 2006-07 to Rs. 494,799 crore in 2011-12, the tax – GDP ratio has decreased from 6.26% in 2007- 08 to 5.59% in 2011-12. As a result, the tax buoyancy, which is a key indicator of efficiency of revenue mobilization in relation to growth in GDP, has decreased during these years and during the financial year 2011-12, it is only 0.70 (less than one). As the revenue realized is nowhere near the revenue potential of the Country and much remains to be done to improve the horizontal equity of the tax system by extending the tax net to hard to tax groups, the Committee have recommended that the Department of Revenue should re-orient their efforts for widening the tax base by bringing in the potential and high net worth assessees into the tax net from specific sectors/channels/categories responsible for tax evasion. A concerted action plan both for widening tax net through innovative means and targeting high net worth assessees should be evolved.

(Recommendation Para No. 1)

Need to phase out unwarranted tax exemptions/deductions emphasized

Various tax exemptions and concessions extended under the Tax Law have depleted considerable portion of tax collection which is borne out by the fact that the revenue foregone on account of tax exemptions has increased by 22.75% from Rs. 77,177 crore in 2006-07 to Rs. 94,738 crore in 2010-11 and corporate sector alone accounted for 63.5% of revenue foregone in 2010-11. For the years 2011-12 and 2012-13 revenue foregone in respect of corporate income tax increased to Rs. 67,995 crore in 2012-13 while the same for personal income tax has increased to Rs. 45,480.1 crore in 2012-13. The Committee have desired to be informed about the extent to which these exemptions are contributing to improvement in the savings-investment ratio as spurt to the economic growth process. Further, the Committee has called upon the Government to consider some interim measures to phase out unwarranted tax exemptions/deductions.

(Recommendation Para No. 3)

Emphasis laid to undertake a focused study to augment the number of new assessees

The Committee have urged upon the Government to undertake a focused study to augment the number of new assessees so that the tax base remains wide and dispersed, reflecting truly the increase in per capita income as also the diversified nature of our economy. The Ministry has been asked to devise an analytical model for widening of tax base, based on the increase in per capita income, both in nominal and real terms.

(Recommendation Para No. 5)

Finalisation and completion of scrutiny/summary assessment cases within a stipulated time-frame emphasized

The Committee have observed that out of total 8.5 lakh scrutiny assessment cases for disposal, the Department had disposed of only 4.6 lakh (53.7 percent) cases in 2010-11. Further, with regard to disposal of summary assessment cases, the Committee find that out of 5.2 crore summary assessment cases for disposal, the Department had disposed of 3.1 crore cases only in 2010-11. The Committee were further constrained to find that the targets of cases to be disposed of had also not been changed for the years 2008-09 to 2010-11. The Committee have desired to be apprised about the current position with regard to disposal of time barred cases as well as achievement of target as stipulated in Central Action Plan for disposal of scrutiny/summary assessment cases. The Committee have strongly expressed the urgency for increasing the number of Assessing Officers for this purpose, by simultaneously enhancing the disposal target for each assessing officer, which should be finalized and completed within a stipulated time-frame.

(Recommendation Para No. 6)

To fix targets in respect of each charge for quick disposal of refund cases and fix responsibility on those officials who fail to fulfil the same stressed

Upon noticing that the steps taken by the Department have not been effective in tackling the backlog of such claims together with consequent heavy interest burden, the Committee have desired that in addition to these steps the Department should fix targets in respect of each charge for quick disposal of refund cases and fix responsibility on those officials who fail to fulfil the same. Simultaneously, a special Cell may also be set up in the Department to ensure that refund claims once received are positively settled within the prescribed time limit thereby reducing the interest burden thereon.

(Recommendation Para No. 9)

To plan any viable strategy to clear the pendency of appeals cases urged upon

The Committee have observed that CsIT(A) were required to dispose of 2,57,656 cases during 2010-11. Out of this, only 70,474 appeals (27.4 percent) were disposed of and the average annual disposal per CIT(A) during 2010-11 was only 479 appeals. Expressing dismay to find that the amount locked up in appeal cases with CIT(A) was ` 2.9 lakh crore in 2010-11 which is equivalent to 108.8 per cent of the revised revenue deficit of Government of India, the Committee have desired the Ministry to plan a strategy to clear this pendency.

(Recommendation Para Nos. 10 and 11)

Avoidance of adventurous assessment orders stressed

Having found that huge amount of revenue was locked up in appeals and was therefore causing undue harassment to the tax payers, the Committee have desired the Ministry to take remedial steps to discourage the assessing officers from making any adventurous assessment orders which result in arbitrary additions leading to appeals.

(Recommendation Para No. 12)

Need for engaging proven counsels in taxation matter to represent the complex cases in the Tribunals, High Courts and the Supreme Court recommended

Noting that the success rate of cases decided in favour of Department at various levels of judiciary did not speak well of the Department, the Committee have expressed serious concern over the manner in which Government cases were represented at various judicial fora. In order to increase the success rate of settlement of cases in favour of the Department, the Committee have desired that the Department be more cautious while filing their appeals, and also have urged the Department to engage special counsels with proven expertise in taxation matters to represent the complex cases in the Tribunals, High courts and the Supreme Court.

(Recommendation Para No. 13)

Need to ensure that the orders of Assessing Officers are fair and judicious and do not result in a very high percentage of dissatisfaction on the part of the assessees emphasized

The Committee have observed that the Assessing Officers function as quasi judicial authority and whose independence and autonomy must not be interfered with. Nonetheless it is obligation of supervisory officers to ensure that there is no miscarriage of justice. Owing to the fact that over a period of time dissatisfaction level of assessees have gone up substantially because a high percentage of appeals are being preferred against the initial assessment order and substantial percentage of appeals preferred by assessees also succeeded, the Committee have desired that the Department seriously examine and inculcate attitude which will ensure that while no legitimate revenue is failed to be realized, the orders of Assessing Officers are fair and judicious and do not result in a very high percentage of dissatisfaction on the part of the assessees.

(Recommendation Para No. 19)

II. 88th REPORT (FIFTEENTH LOK SABHA) ON ACTION TAKEN BY THE GOVERNMENT ON THE OBSERVATIONS/RECOMMENDATIONS OF THE COMMITTEE CONTAINED IN THEIR FORTY-SECOND REPORT (FIFTEENTH LOK SABHA) ON ‘UN-ECONOMIC BRANCH LINES IN INDIAN RAILWAYS’ RELATING TO MINISTRY OF RAILWAYS.

Bringing down the loss making branch lines to the barest minimum recommended

The Committee have noted that the Ministry of Railways have formulated strategies to cut down expenditure on uneconomic branch lines and that the matter was being pursued with great vigour. Taking note of the fact that the number of uneconomic branch lines was reduced from 115 to 89 as on 31.12.2012, the Committee have recommended that the position may be reviewed regularly so as to bring down the loss making branch lines to the barest minimum.

(Recommendation Para No. 3)

Need to come out with appropriate mechanisms in consultation with the State Governments so that losses incurred are shared urged

While concurring with the view that running of railway branch lines need to be looked not just by their economic viability but on their overall impact on the socio-economic interests of the public, the Committee were of the considered opinion that such losses when allowed to continue particularly beyond a certain agreeable limit and that too without the States sharing of such losses, would weigh heavily on the Union exchequer. The Committee have therefore, urged the Ministry to come out with appropriate mechanisms in consultation with the State Governments so that the losses incurred are shared where it is considered expedient in public interest not to close the loss incurring branch line.